Japan's Nikkei average jumped 1.5 percent to close above the key 9,000 level for the first time in seven weeks on Friday after leaders of the eurozone agreed to take emergency action to bring down borrowing costs for Italy and Spain.
"Obviously, you've got a quick snap reaction as shorts look to cover. Whether this deal (in Europe) actually changes anything is a big question. The problem is that longer-term measures are needed," a trader at a European brokerage said, referring to the euro zone agreement.
"One of the positives that you can take away is that the EU is actually doing something rather than sitting around and talking ... The problem is that the bailout fund hasn't got any bigger. It doesn't do anything to fix the underlying problem."
Eurozone leaders agreed that the rescue funds of the region may be used for stabilizing bond markets without forcing countries that comply with EU budget rules to adopt extra austerity measure or economic reforms.
The Nikkei .N225 ended up 132.67 points at 9,006.78 after trading as high as 9,044.04; the U.S. stock index futures also bounced after the news, with S&P futures up 1.3 percent and Dow Jones futures up 1.1 percent.
Shun Maruyama, chief Japan equity strategist at BNP Paribas in Tokyo, said, "The near-term target is 9,300 to 9,400. After the short covering, we will have to look at fundamentals. These are not necessarily good," "The market will also enter earnings season. Profit guidance will not be so good." and added short covering by investors would likely continue until mid-July.